Japan says US tariff pressure on car sector easing

• Reuters

• Published On Feb 26, 2026 at 02:46 PM IST

The report dropped specific references to tariff-related pressure on the auto secto.

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The impact of US tariffs on Japanese automakers is easing, Japan said in a report published on Wednesday, while maintaining a cautiously optimistic view of the overall economy.

In its monthly economic assessment for February, the Cabinet Office reiterated that the world’s fourth-largest economy was recovering moderately while ‌still feeling the ⁠effects ⁠of US tariffs.

The Cabinet Office revised up its assessment of corporate profits for the first time in 11 months, saying they were “showing signs of recovery” instead of “recovery is stalling”, citing upbeat October-December quarter earnings.The report removed a specific reference to the tariff impact on the auto industry, reflecting improvements in US-bound car exports and ⁠auto production ‌outlook.Commenting on Friday’s US Supreme Court decision striking down President Donald Trump’s tariffs that he pursued under ⁠a law meant for use in national emergencies, a Cabinet Office official told a media briefing that it appeared to have minimal effect on Japan’s auto industry as existing US tariffs on Japanese cars had been imposed under a separate scheme.On prices, it highlighted a continued drop in consumer inflation rate thanks to slowing food price hikes. The report’s ‌wording for consumer prices was revised to “rising at a slower tempo” from “rising” for the first time since November 2024.Other assessments, including the ⁠need to remain vigilant against market moves, “picking up” private consumption and “moderately picking up” business investments, were unchanged.Japan’s economy grew an annualised 0.2 per cent in the October-December quarter, avoiding a technical recession but missing market forecasts. The Bank of Japan kept interest rates steady last month at 0.75 per cent, while a majority of economists in the latest Reuters poll projected a hike to 1.0 per cent by June, if not in April.